Symptoms

The SmartForms solution was packed for deployment using the K2 PD Tool. Post deployment the SmartObjects property required property was getting auto set to required, even if the Stored Procedure parameter (on which the SmartObject was created) was not set to required/mandatory.
 

Diagnoses

The issue was caused by K2 Service account does not have enough permission to the Stored Procedures on the database.
 

Resolution

Granting K2 Service account the following permission to the Stored Procedures resolved the issue.
-Execute
-View Definition